IRS Proposes Guidelines On Politicking By Tax-Exempt Groups

Ending the year by weighing in again on a topic that caused it great grief back in the spring, the Internal Revenue Service on Tuesday defined limits on the political activity of tax-exempt "social welfare" organizations.

The Wall Street Journal writes that the Obama administration is "seeking to reduce the influential role that the secretive groups have played in recent elections. The new 'guidance' ... would curtail a broad array of these tax-exempt entities' activities, including campaign advertising, voter registration, get-out-the-vote efforts, and distribution of voter guides and campaign materials."

The Treasury Department says the guidance, a summary of which is posted here, "defines the term 'candidate-related political activity,' and would amend current regulations by indicating that the promotion of social welfare does not include this type of activity."

Translation: Social welfare organizations could not engage in such "candidate-related political activity" and retain their tax-exempt status.

What does "candidate-related political activity" include?

-- "Communications that expressly advocate for a clearly identified political candidate or candidates of a political party."

-- "Communications that are made within 60 days of a general election (or within 30 days of a primary election) and clearly identify a candidate or political party."

-- "Communications expenditures that must be reported to the Federal Election Commission."

-- "Any contribution that is recognized under campaign finance law as a reportable contribution."

-- "Grants to section 527 political organizations and other tax-exempt organizations that conduct candidate-related political activities (note that a grantor can rely on a written certification from a grantee stating that it does not engage in, and will not use grant funds for, candidate-related political activity)."

-- "Voter registration drives and 'get-out-the-vote' drives."

-- "Distribution of any material prepared by or on behalf of a candidate or by a section 527 political organization."

-- "Preparation or distribution of voter guides that refer to candidates (or, in a general election, to political parties)."

-- "Holding an event within 60 days of a general election (or within 30 days of a primary election) at which a candidate appears as part of the program."

In a statement, a Treasury official indicated the guidelines are meant to simplify oversight of tax-exempt groups:

" 'This proposed guidance is a first critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations,' said Treasury Assistant Secretary for Tax Policy Mark Mazur. 'We are committed to getting this right before issuing final guidance that may affect a broad group of organizations.' "

Treasury said it is seeking public comment about the proposed guidelines.